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How Bilbao solved Auckland's port problem

How Bilbao solved Auckland's port problem

It's hard to imagine that Bilbao, an iconic centre of European culture and creativity, was a city in chaos and despair less than 30 years ago - and that it successfully dealt with one of the major problems facing Auckland.

Highlights

Also on KPMG.com

That issue was the future of a port blocking access to a major waterway - the Nervion river in Bilbao, the Waitemata Harbour in Auckland.

Simon Hunter, KPMG partner in Auckland, says Bilbao solved the problem, with some lessons for Auckland, and is recognised as a Magnet City in KPMG's global study of cities city that reinvent themselves, attracting young wealth creators to boost growth.

Hunter says: "While we don't have the crisis Bilbao suffered, there is a growing desire to renew the heart of the city, recapture the waterfront, move the port and create integrated air, rail and walking infrastructure.

"Bilbao, now recognised for architecture and its education and cultural institutions, changed commercial focus from industry to a combination of technology, creativity and tourism.It is on the world stage because of the collective effort of its people - something we want from Aucklanders for Auckland."

Bilbao hit rock bottom in the 1980s, facing an economic crisis, an environmental crisis and a social crisis all at once. The Spanish city was a steel and shipping centre when the global market had turned to jelly; its mining and heavy industry bulwarks went similarly soft; its huge port, with fewer goods to export, declined.

In 1983, floods claimed 30 lives, swirling waters reaching three stories high on city buildings - leaving a thick carpet of putrid mud in the streets. Unemployment hovered near 30 per cent, the Basque separatist movement maintained a series of bombings and young people abandoned a city also choked by traffic jams and alarming pollution.

Caroline Haynes and Vanessa Langley, authors of KPMG's global study of nine Magnet Cities, say Bilbao joined the ranks of the magnet cities with an unprecedented renewal plan, joining cities like Changwon (Korea), Denver, Incheon (Korea), Malmo (Sweden), Oklahoma City, Pittsburgh, Christchurch and Tel Aviv (Israel). The study focuses on cities previously in a spiral of decline but which switched "magnetic pull", turning their economy around from a negative push to a positive pull, with some revolutionary thinking.

A strong city identity, physical renewal, attracting young people, new ideas and links with academic institutions, connecting the city to other cities, fundraising and strong leadership are principles in all Magnet City resurgences.

The fightback

City leaders extensively re-built the heart of the city and began a range of measures to attract young young "wealth creators".

The city was determined to rescue the river which ran through its centre but was choked, polluted and blocked off to residents by the city's port and heavy industries. It spent US$1 billion to deal with industrial and household sewage and dredged the river.

The cost was funded through loans secured against an increase in water rates paid by Bilbao's residents and businesses. It took about 20 years for the river to recover;it once again hosts fish and crustaceans...and residents of Bilbao who enjoy their waterfront.

The port was relocated, at a cost of US$986 million, financed using debt raised against future income. All the industrial companies flanking the river were also relocated - a deal accomplished by forgiving large amounts of tax owed by many of them.

In parallel, the renewal of the downtown began with the aim of making Bilbao a centre of culture and creativity, including:

Large boulevards were pedestrianised; Bilbao's 19th century squares and circuses were filled with beautiful gardens.

A new airport, as well as an award-winning metro system. It cost US$1.2 billion, financed through long term debt. A modern tram system was also built, encouraging people to leave cars outside the city centre but connecting pedestrians with heavily used facilities.

In 1997, the Guggenheim Museum - Bilbao's globally known attraction - was built for US$169 million. It sparked public protests as many felt strongly the city could not afford it.

The result

The beautiful Frank Gehry-designed Guggenheim drew the eyes of the world to Bilbao, says Haynes. In its first three years, tax from visitors more than recouped construction costs. Before the Guggenheim, about 170,000 visitors came to Bilbao each year. By 2011, that increased to 726,000; in its first year the museum contributed US$212m to the city's GDP.

The "Guggenheim Effect" has become globally recognised as a way to help turn a city around although Haynes says: "The real impetus came from rescuing the Nervion river; everything Bilbao did to change its magnetic polarity flowed from that. Without that, the new metro, the downtown renewal, the Guggenheim would never have happened."

The city then decided to attract research & development companies in new technologies like video games and the audio-visual sector, helping position Bilbao as fertile ground for new businesses - a move which continues today.

Over the last 10 years, Bilbao's economy has grown by 18 per cent - a strong result in the face of what has happened to the Spanish national economy. By 2011, the city had paid off all debt associated with the renewal.

Its GDP is significantly more than other Spanish cities on a per capita basis and is higher than comparable cities in UK and France. It has ridden out the post-2008 Spanish recession relatively well - unemployment is 10 per cent, half the 20 per cent national average.

"However, more than just the numbers, Bilbao is an elegant, supremely calm city," says Haynes, "with its physical beauty augmented by the calmness of its people and way of life - cheerful, laid-back and sociable residents."

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